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Understand “Drop Shipment” in Order Management? -Part II

Posted on April 5th, 2008 by Sanjit Anand |Print This Post Print This Post |Email This Post Email This Post

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Most of us heard about e-commerce site like ebay,ubid.com,amazon,com which is very common place in advance countries like USA, UK & Singapore where people can sell or buy there product. Have you ever think ,what is similar situation in real world , when the the word 'drop shipment' comes to your mind. ......a business situation when the retailer or trader has no stock himself, instead giving customer details directly to the seller, and then saler than fills the order and send it to customer directly.How its sounds...

Drop shipping still remains a hot topic among SCM practitioner and apps Implementer , but even though it has many benefits, it isn’t the best option for every business. I am not going to walk through the pros and cons of the process , rather would like to walk through some of the key steps and processes which exist in real world which is important to understand the concept which helps during configuration with the product.

As in one of the last post , we have seen drop shipments is a method of fulfilling sales orders by selling products without the order taker handling, stocking, or delivering the products. The seller buys a product and the supplier ships the product directly to the seller’s customer .

In other word ,drop Shipment is a process where the customer places a purchase order on a company and this company instructs its supplier to directly ship the items to the customer.

Drop shipments are done because of the following reasons:

  • Customer requires an item that is not normally stocked
  • Customer requires a large quantity of the item which is not available with you
  • It is more economical when the supplier ships directly to the customer

dpship

 

 

 

 

 

 

double-arrow Types of drop shipment

If you see the real world scenarios this can be best categorize as mainly under three heads as:

  • Type 1 : Full Drop Shipment

Where the seller sends the purchase order to the supplier for the full quantity that the customer had ordered

  • Type 2 : Normal Shipments and Partial Drop Shipment

Under this scenario, If the seller has only part of the quantity available for shipping to the customer, then that quantity is shipped; a purchase order is created for the remaining quantity which the seller was not able to fulfill. This is typically true for single based item.

  • Type 3 : Normal Shipments and Full Drop Shipment

In this scenario, the seller ships some goods from inventory to the customer, and the other goods are always shipped from an external source (supplier).

double-arrowProcess Flow for Drop Shipment (Adopted from User Guide)

1Drop Shipments for Standard Items

  1. Enter an order for drop ship item
  2. Book the order
  3. Run Requisition Import
  4. Create a purchase order from the requisition
  5. Approve the purchase order
  6. Receive against the purchase order

2Forward drop ship flow for ATO model

  1. Enter a sales order for your drop shipped ATO model.
  2. Select your options.
  3. Schedule and book order (schedule date should default to request date for all lines).
  4. Create you configured item by progressing your order ATO Model line or running the Autocreate Configuration batch process.
  5. Verify order and line status.
  6. Create a supply order (dropship requisition) by progressing your configuration item line or running the Autocreate Dropship Requisition batch process
  7. Run the Oracle Purchasing Requisition Import to create a purchase requisition.
  8. Create a purchase order for the requisition.
  9. Approve the purchase order.
  10. Receive the purchase order.

3Forward drop ship flow for ATO Item

  1. Enter a sales order for your drop shipped ATO item
  2. Schedule and book order (schedule date should default to request date for all lines).
  3. Create a supply order (dropship requisition) by progressing your configuration item line or running the Autocreate Dropship Requisition batch process.
  4. Run the Oracle Purchasing Requisition Import to create a purchase requisition.
  5. Create a purchase order for the requisition.
  6. Approve the purchase order.
  7. Receive the purchase order.

4Non-SMC PTO model with drop shipped standard options

  1. Enter a sales order for your PTO model.
  2. Select options; source type on the components will default.
  3. Schedule and book the order.
  4. Run requisition import to create a purchase requisition.
  5. Create a purchase order for the requisition.
  6. Approve the purchase order.
  7. Receive the purchase order.

double-arrow Drop Shipment (Technical)

This section is going to help those who asked to provide some more granular details for drop shipment some time back.

As discussed above and in last post drop shipment is the process by which an organization takes orders from their customer and gets it fulfilled by a 3rd party. The selling organizatoin places a purchase order to teh 3rd party (supplier) who ships the ordered products to the end customer directly. There are a large number of tables that contain data related to drop ship orders. For example:

  • oe_order_headers_all and lines_all (order info)
  • po_requisition_lines_all, headers_all etc.( req. info)
  • po_headers_all, lines_all (po info)
  • oe_drop_ship_sources_all (this table contains the link between the req, po and the original order)

Moreover, there are many more tables involved in this therefore its better to have a understanding by corresponding ER diagram.

dropshipment

There is always a need to develop some of the custom report, therefore understanding of understanding table is very very important. Here are the same of underline tables details.

  • PO_LINE_LOCATIONS_ALL
    • This table stores document shipment schedules for purchase orders, purchase agreements, quotations, and RFQs.
  • PO_LINES_ALL
    • This table stores purchase document lines for purchase orders, purchase agreements, quotations, and RFQs.
  • PO_HEADERS_ALL
    • This table stores document headers for purchase orders, purchase agreements, quotations, and RFQs.
  • PO_DISTRIBUTIONS_ALL
    • This table stores purchase order distributions.
  • PO_REQUISITION_HEADERS_ALL
    • This table stores requisition headers.
  • PO_REQUISITION_LINES_ALL
    • This table stores requisition lines.
  • PO_REQ_DISTRIBUTIONS_ALL
    • This table stores requisition distributions.
  • PO_REQUISITIONS_INTERFACE_ALL
    • This is the Requisition Import interface table.
  • OE_ORDER_LINES_ALL
    • This table stores information for all order lines in Oracle Order Management.
  • OE_DROP_SHIP_SOURCES
    • This table stores relationships between order lines in oe_order_lines_all table and associated oracle purchasing requisitions in PO_REQUISITIONS_ALL and Oracle purchasing purchase orders in PO_LINES_ALL.
  • RCV_SHIPMENT_LINES
    • This table stores receiving shipment line information.

double-arrow Drop Ship @Release 12
There are no Changes in R12 for Drop Ship Flow same as R11 only

double-arrow Date flow for Drop Shipment

Reference Notes

  • Note 225434.1 : Drop Ship FAQ document
  • Note 130702.1 :Drop Shipments process

Related Posts

Posted in Oracle Order Management | 16 Comments »Email This Post Email This Post | Print This Post Print This Post

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16 Responses
  1. Shravan Kumar Says:

    This is excellent.

  2. Kumar Says:

    Concept is very good. But i want to know what is the differents betweent ‘Drop shipment’ and ‘Back 2 Back’ Orders. Please help on this.

    Thanks in Advance.

  3. Kumar Says:

    Hi,
    Thanks for your Information.But when i did the Back-to-Back orders it’s not working.
    Steps which i did.
    1) I created the Item with the Templete “Purchased Item”
    Item Attributes are
    Bill of Material (BOM allowed) Check box is checked.
    List Price is given in the Purchasing Tab.
    Item is “Buy” item.
    “Buil in WIP” check box is checked in work in process tab.
    In Order Management tab customer ordered is enabled.
    Is this item setup is OK for Back-to- Back orders or is anything required.?
    2)when i create the order the line status is “Awaiting Shipping” is coming, and i am unable to create the Requisition .
    Please help on this.

    Thanks in Advance
    Shravan Kumar.

  4. sanjit Says:

    there is some thing missed out. check your mail, I have send you detailed list and steps to get this functionlity.

  5. chandra sekhar byna Says:

    I unable to ship confirm,the Shipping Exceptions Report is warning out what will be the reason.

  6. Sanjit Anand Says:

    What is the error/warning message?

    Also, look into the Shipping Exceptions Report to review potential causes.

    Normally , When you get any error if you click on “details”, you get to know the root cause of the problem.

    Say, if error mentions, Inventory controls missing, that means that some of the delivery lines in your delivery need to have a serial number to be given or something like that.

    additionally, you need check the Inventory organization parameters REVISION,LOT,SERIAL) tab and (ATP,PICK,ITEM SOURCING) tab,LOCATOR CONTROL from inventory parameters tab, check the picking rules window, and check the sales order release form from order management.

    Other possiblity is that Reservations MUST be turned on in order to complete the pick confirm/ship confirm process.

  7. Craig Says:

    Hey Sanjit,

    Could you send me the set up around back to back orders as well – much appreciated.

    The question I have is …
    11.5.10.2 in OM I have a line on ‘backorder’ i.e. no stock in INV. I would now want the system to create a PO so that my stock level is increased and the OM Order can be fulfilled, how woudl this work?
    Again Many Thanks

  8. Drop Shipment - Functional Setup and flow Says:

    […] Understand “Drop Shipment” in Order Management? -Part II […]

  9. “Internal” versus “External” Drop-Ship: What’s the difference? Says:

    […] Understand “Drop Shipment” in Order Management? -Part II […]

  10. raj Says:

    Hi Anand, Its greate post. You are really helping ppl uderstanding ora apps in deep.I am trying to work on the dropshipments. Would you please help me by sending the detail steps involved in dropshipment concept.

    Thanks in Advance,
    Raj

  11. Sampath Desikan Says:

    Hi Sanjit

    When I do a partial receipt in purchasing on PO that is based on a OM Order Line, The Order line in OM gets split out. Is there anyway to stop this?

    Some kind of a setup or a profile option. I would like to do this only for Drop Ship POs created in Purchasing through Order Management

    Thanks
    Sampath

  12. Nusha Says:

    I need Setup documents for Back to Back Order flow. Kindly send it to my mail id

  13. Sparqui Says:

    We are usingthe standard drop ship flow, but our end custoemr requries an ASN from the selling location – This is not covered as part of this flow, can any one lend some advice as to how we can generate an ASN?

    I guess we could receive the shipping ASN into inventory and logically ship from there?
    Any thoughts

  14. Vishal Majithia Says:

    I am confused about the Partial Dropship Item. How can a same item behave as INTERNALLY SOURCED and EXTERNALLY SOURCED?

  15. upender Says:

    can send full details of ATO configurator and PTO configurator method.why it is required in ONT.
    Please send to mail or Publish here

  16. NR Says:

    This is awesome !!

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